Types of GST in India: CGST, SGST, IGST, and UTGST Explained

Quick Recap: What is GST?

If you're new to GST or need a refresher, check out our complete guide on what is GST . It explains how GST transformed India's indirect taxation structure.

The 4 Types of GST

There are four types of GST implemented in India, each serving a specific purpose based on the nature of the transaction and the location of the buyer and seller:

• CGST (Central Goods and Services Tax)
• SGST (State Goods and Services Tax)
• IGST (Integrated Goods and Services Tax)
• UTGST (Union Territory Goods and Services Tax)

Let's explore each in detail.

1. CGST – Central Goods and Services Tax

CGST is levied by the Central Government on intra-state transactions. When a sale occurs within the same state (for example, a seller in Delhi sells to a buyer in Delhi), both CGST and SGST are applied.

• Collected by: Central Government
• Applicable on: Intra-state transactions
• Example: A company in Maharashtra selling goods to another company in Maharashtra
• Rate Split: If the total GST rate is 18%, then 9% CGST + 9% SGST is charged

CGST ensures the central government receives its share of taxes when business happens within a state. It is governed by the CGST Act, 2017.

2. SGST – State Goods and Services Tax

SGST is the counterpart of CGST and is collected by the State Government. It is also applicable on intra-state transactions. The revenue collected from SGST goes to the respective state government.

• Collected by: State Government
• Applicable on: Intra-state transactions
• Rate Split: 9% SGST (in the example above)

SGST is governed by the respective State GST Acts. Each state administers its SGST law, although the overall structure remains uniform across India.

3. IGST – Integrated Goods and Services Tax

IGST is charged on inter-state transactions, i.e., when goods or services are moved from one state to another. The Central Government collects IGST and then distributes the appropriate share to the destination state.

• Collected by: Central Government (later shared with state)
• Applicable on: Inter-state transactions
• Example: A seller in Gujarat supplies goods to a buyer in Karnataka
• Rate: If the GST rate is 18%, the entire 18% is charged as IGST

IGST also applies to import and export transactions. Exports are zero-rated under GST, which means exporters can claim refunds on the input taxes paid.

4. UTGST – Union Territory Goods and Services Tax

UTGST applies to Union Territories that do not have a legislature of their own, such as Chandigarh, Lakshadweep, and Andaman & Nicobar Islands. Like SGST, UTGST is charged along with CGST on intra-UT transactions.

• Collected by: Union Territory administration
• Applicable on: Intra-UT transactions
• Example: Sale within Andaman & Nicobar Islands
• Rate Split: 9% CGST + 9% UTGST (for an 18% GST rate)

If the Union Territory has a legislature (like Delhi or Puducherry), SGST is applicable instead of UTGST.

GST Transaction Type Table

Impact of GST Types on Business

Understanding how these tax types apply is not just theoretical. It impacts:

• Pricing: Different tax rates apply depending on location, affecting product pricing.
• Invoicing: Accurate GST categorization is crucial for tax-compliant invoicing.
• Return Filing: GST returns must correctly declare CGST, SGST, IGST, and UTGST.
• ITC: Wrong classification may lead to disallowed ITC claims.

Businesses dealing across states or exporting goods and services especially need clarity on IGST handling. Errors can lead to notices, delayed refunds, or penalties.

Common Challenges in GST Billing

• Rate Confusion Knowing which tax (CGST/SGST vs. IGST) to apply based on location
• Invoice Errors Manual invoicing often leads to misclassification of tax
• Multi-State Operations Tracking tax collected across different locations
• Return Matching Mismatches between GSTR-1 and GSTR-3B

These challenges can be overwhelming, especially for small business owners who are not tax experts.

Make GST Billing Easy with CodeZion Invoice

Tracking different types of GST, applying correct rates, and filing returns can be a burden – especially for small businesses and freelancers. That’s where CodeZion Invoice steps in.

Why Choose CodeZion Invoice for GST Billing?

• Auto Tax Calculation Automatically detects whether CGST/SGST or IGST should be applied based on the location of parties involved.
• GST-Compliant Invoices Create professional invoices with all required GST fields.
• Multi-State Support Manage transactions across multiple states and Union Territories.
• Integrated Reports Get summaries for CGST, SGST, IGST, and UTGST for easy filing.
• Fast Filing Export data in formats compatible with GST return filing portals.
• Cloud-Based Access Use the software from any device, anywhere.
• Customization Add your logo, branding, and adjust tax fields as per your industry. With a clean interface and smart automation, CodeZion Invoice minimizes human error and maximizes tax efficiency.

Final Thoughts

Understanding the types of GST is essential for any business operating in India. Whether it’s CGST, SGST, IGST, or UTGST, applying the correct tax type ensures compliance and avoids legal trouble. But you don’t have to go it alone.

Let CodeZion Invoice handle the complexity of GST billing so you can focus on growing your business. With smart features, GST compliance, and intuitive workflows, it’s the best companion for modern Indian entrepreneurs.

Frequently Asked Questions (FAQ)